Bond yields continue to decline ahead of Treasury Bills auction

Wednesday, 16 January 2019 00:00 - - {{hitsCtrl.values.hits}}

By Wealth Trust Securities

The secondary bond market remained active yesterday with yield declining further on the back of continued buying interest across the yield curve. The liquid maturities of 15.12.21, 15.12.23, 15.03.25 and 01.06.26 saw its yields dip to intraday lows of 10.98%, 11.30%, 11.55% and 11.60% respectively against its previous day’s closing levels of 11.15/25, 11.45/50, 11.58/63 and 11.65/70. Furthermore, the 01.05.20, three 2021’s (i.e. 01.05.21, 01.08.21 and 15.10.21), 01.07.22, 15.03.23, 01.08.26 and 15.06.27 were seen changing hands at levels of 10.80% to 10.85%, 11.05% to 11.25%, 11.20%, 11.35%, 11.55% and 11.65% respectively. In the secondary bill market, November 2018 and January 2019 maturities were traded at levels of 10.60% and 10.70% to 10.80% respectively as well.

Today’s bill auction will have on offer a total amount of Rs. 26 billion consisting of Rs. 10 billion of the 182 day and Rs. 16 billion of the 364 day maturities. At last week’s auction, the weighted averages decreased to 9.94% and 10.85% on the 182 day and 364 day maturities respectively.

The total secondary market Treasury bond/bills transacted volume for 11 January was Rs. 25.47 billion.

In the money market, the overnight call money and repo rates averaged 9.00% as the net liquidity shortfall stood at Rs. 67.00 billion yesterday. The OMO Department of the Central Bank infused liquidity by way of an overnight and a seven day term reverse repo auctions for successful amounts of Rs. 20 billion and 10 billion, at a weighted average yield of 9.00%.

Rupee loses

The USD/LKR rate on spot contracts was seen depreciating yesterday to close the day at levels of Rs. 182.20/35 against its previous day’s closing levels of Rs. 181.90/10 on the back of importer demand.

The total USD/LKR traded volume for 11 January was $ 51.39 million.

Some of the forward USD/LKR rates that prevailed in the market were 1 month - 183 15/55; 3 months - 184.90/30 and 6 months - 187.95/45.